Emini Divergence revisited

MarkB,

(all times pacific)
Below is a 5m chart. (see next post directly below this one for the 3m chart)
Here are two charts, one is a 5m and the other a 3m, both from Thursday 1-14. Now this is a situation not of the NO PM setup getting you into a bad setup, but one where it keeps you out of a good setup. But there may be something here for the opposite of that as well.

You will see on the 5m, no DV on the Chaikin at approx 1010am, but on the 3m chart, there's clearly a DV. This was a very good setup to take on Thursday. What this may tell me is that if you use a shorter time frame around the middle of the trading day, (me 845a to 1030a and you guys whatever) the indicators are working off less bars and so maybe a more accurate account of the volume and price action together. What do you think?

jd
 

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Thanks for the link. Although divergence trading isn't my thing, i've found some very valuable information for my own system. I'd like to thank NPP and wish him all the best. He truly set a standard with his contribution to this board.
 
Quote from Lancer:

Are the profits generated by those particular/few divergence signals so great that they justify missing out on trend days? IMO, divergence signals are valid on trend days (so trend days need not be avoided), but for those counter-trend pullbacks following the divergence signal, consider what signals get you back in the direction of the trend; (avoiding a stop-out on the divergence position).

Maybe a counter-trend reversal signal can be found on the next lower time-frame chart? For example, for a trend continuation signal (counter-trend close and reverse), maybe consider divergence on a lower time-frame chart, or fast/slow oscillator crossover or sling, or MACD crossover, or price oscillator xover zero, or ? all back in the direction of the trend.

Alternatively, maybe there needs to be a trend filter so that system rules are adaptable to market conditions?

Why get whacked trade after trade due to "failed" divergence signals on trend days, or miss out on trend days altogether. What rules will improve the method so that trend days can be traded as successfully as consolidation days?
More...

Makes sense to me Lancer. That's what I mentioned in my first post today is what I'd like to avoid happening....getting whacked that is :)
Your paragraph above about counter trend reversal signals etc. etc. is over my head at this point. I'll need to look that stuff up. Sounds like something may be useful there though.

thanks,
jd
 
Lancer,

That's exactly what no_pm's technique allows you to do on a trend day, as far as getting in on a retracement AGAINST the trend. It also works on getting into a pullback in the direction of the trend if the pullback was deep enough. That's based on volatility a la keltner channel.

One of the reasons why Lescor has had more experience with this method than I have recently is because I've been very involved with the Woodie's CCI club techniques, and they often line up with no_pm's signals. Woodie's system is not mechanical though, it requires a lot of study in order to apply it correctly. But I've found that it works well in trending and non trending situations.

As far as MACD or other crossovers are concerned? There's quite a bit of info on the Woodie boards about use of the 34 period EMA and 24 period least squares ma.

All I'm really saying here is that I find that these two techniques really provide confirmation on valid signals in both. While the Woodie CCI divergence signals often help to confirm the Chaikin signals, they also are really great for pullbacks in trending markets. Perhaps better than the pullback entries with divergence in no_pm's system. I've actually been thinking about tightening up the Keltner channel in no_pm's system for awhile now. I think that would provide more manageable profit targets on the countertrend entries, and more entry signals for resumption of trend.

JD, excellent point and illustrations about multiple timeframes imho.

Mark
 
I love this site....

I'm happy to say that I've been free of mono for about a month (gone completely). I've got my energy back and a much better attitude. Unfortunately my old boss still has no work for me, so I'm trying to make a living trading fulltime.

I've made some changes to my trading that have boosted performance dramatically. I was surprised to see this thread as most journals come and go and are forgotten a day after the last post. I was thinking of starting another journal with the new method, but I don't have all the rules down like I did with the first method.

Here's some background on the changes.

Some things were bothering me about the divergence method. 1). It had times when there were very few trades. 2). You had to avoid trend days and watch while others racked up the big gains. 3). The width of the Keltner Channel has been too low for me (anything below 2 points for the stop and I don't feel comfortable with it). 4). The profit exit missed lots of big moves that continued long after I was out.

It seems as if the only time it makes big money is in the non-trending choppy days which aren't all that common. If this is to be my future I needed to make money on days of breakouts as well.

I contacted another ET member that trades breakouts only for some guidance. He gave me some fantastic advice and I used it to come up with my new method.

With such a positive vibe toward the last journal I think I'll start a new one. Even if it fails to live up to my profit expectations maybe bouncing ideas off one another will help improve our overall trading.
 
no_pm,

It's really wonderful that you've decided to post, as many of us have been concerned about your well being after the (understandably) quick departure.

Of course, those of us who were following your first journal thread would love to see you post a new journal. But more important is knowing that things are well with you now.

Good luck and best wishes on your conversion to full time. I'm sure that you're approaching it with an upbeat and diligent mindset.

Best,

MarkB
 
Welcome back. Great to see you've made a full recovery and are rarin' to go as a full time trader, you obviously have the skills it takes to make it.
 
No PM,

what MarkB just said....

off trading subject, but did you see
Apple's new app, GarageBand? Looks
pretty cool. John Meyer did a great
demo with Jobs live at MacWorld.
Anyway, just wondering what you
though of it.

jd
 
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